GEORGIA: ACTION REQUEST FOR DEPARTMENT GUIDANCE -

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 000398 SENSITIVE SIPDIS E.O. 12958: DECL: 08/25/2018 TAGS: PGOV PHUM PREL GG SUBJECT: GEORGIA: ACTION REQUEST FOR DEPARTMENT GUIDANCE - IMEDI TV Classified By: AMBASSADOR JOHN F. TEFFT. REASONS: 1.4 (B) AND (D). ¶1. (C) Summary: Mark Hauf, attorney for Ina Gudavadze, widow of Badri Patarkatsishvili, has repeatedly approached the Ambassador and other Embassy officials and requested that Post advocate on behalf of Gudavadze with the Government of Georgia. Specifically, Hauf requests that Post demand that the GOG return Imedi TV to Gudavadze. Imedi resumed its news broadcasts in fall 2008 after being off the air for nearly a year after the Government closed it down in November 2007. Rak Georgia Holding (a subsidiary of Rakeen Group headquartered in the United Arab Emirates) purchased a 90 percent stake in Imedi TV from the previous owner Joseph Kay, an American citizen and distant relative of Patarkatsishvili, on February 25. Kay retains a 10 percent stake in Imedi. Gudavadze claims an ownership stake in Imedi by virtue of being the widow of Patarkatsishvili who controlled the company through a nominal third party owner; however, Gudavadze has not filed a case in the Georgian courts to recover this asset. Because of its connection to the November 7 demonstrations, Imedi and its legal status has become a rallying cry for the opposition. ¶2. (SBU) Action Request. Post requests that Department provide clear guidelines to respond to requests for political advocacy on behalf of Gudavadze and other interested parties. Suggested Department Guidance for Post is as follows: Start Suggested Text: The control of Imedi TV is a legal dispute between private parties. As a matter of policy, the USG does not intervene is such disputes and is unable to advocate on behalf of any party. The proper venue for the settlement of this legal dispute is through the court and arbitration system. End Summary and Suggested Text. BACKGROUND ¶3. (SBU) Prior to his sudden death and consistent with his normal course of doing business, wealthy Georgian businessman and government opponent Badri Patarkatsishvili created a complex structure of ownership of Imedi media in order to disguise his ownership interest in the network. Joseph Kay claims to be and is generally recognized under Georgian law as the current rightful owner of Imedi. Kay is a relative of Patarkatsishvili by marriage. Although virtually unknown to the Georgian public, he had long-standing business and family 
ties with Patarkatsishvili. Giorgi Jaoshvili, the previous nominal owner of Imedi at the end of Patarkatsishvili,s life, confirmed that he has known Kay since the early 1990s, and that Kay was a confidant of Patarkatsishvili. ¶4. (SBU) According to Kay,s lawyers, Kay was given Patarkatsishvili,s will which specified how the estate was to be divided and named Kay as the executor. Kay claims that he is the executor of Patarkatsishvili,s estate, but is not an heir to any of Patarkatsishvili,s holdings. Jaoshvili also confirmed that when Kay told him that he was named as executor of Patarkatsishvili,s will and estate, it seemed logical. Kay had been granted conservatorship (a temporary injunction giving Kay power over the estate but limiting his ability to formally dissolve the estate) over Patarakatsishvili,s estate by a Tbilisi court. On February 20, Kay was formally adjudicated executor of Patarkatsishvili,s estate by a Tbilisi court. On February 25, Kay sold 90 percent of Imedi to Rak Georgia Holding (a subsidiary of Rakeen Group headquartered in the United Arab Emirates). TRANSFER OF IMEDI ¶5. (SBU) Kay,s lawyer claimed that Kay told him that Patarkatsishvili was engaged in some kind of political QPatarkatsishvili was engaged in some kind of political negotiation with the Government of Georgia shortly before his death and that Imedi was the focus of the government's interest. The nominal head of Imedi, Jaoshvili, confirmed that Patarkatsishvili had told him directly that he (Patarkatsishvili) directed Kay to negotiate with the Government of Georgia in November 2007 after Patarkatsishvili was exposed as plotting a coup d,etat. In order to facilitate Patarkatsishvili,s settlement with the government, Kay purchased the ownership of Imedi from Patarkatsishvili, 14 days before Patarkatsishvili,s death. Patarkatsishvili sold his majority stake of Imedi (held by Jaoshvili) to Kay for four reasons: Kay is a US citizen; Kay was a relative of Patarkatsishvili,s; Kay was a businessman who knew how to run a business and could keep the station alive; and the government knew that Kay had no political ambitions and may have agreed that Kay was an acceptable owner of Imedi from their perspective. ¶6. (SBU) Following Patarkatsishvili,s death, Kay came forward with a document signed by Patarkatsishvili which TBILISI 00000398 002 OF 003 directed Jaoshvili to transfer his majority shares of the Imedi holding arrangement to Kay. Jaoshvili transferred the shares to Kay but now claims he did so under duress. No one with direct knowledge of what went on regarding the transfer of Imedi has told Embassy Tbilisi anything other than Patarkatsishvili transferred the company to Kay. Former Imedi broadcaster, Giorgi Targamadze (Member of Parliament and leader of the opposition Christian Democratic Party) believed the transfer was legitimate. Bidzina Baratashvili, long-time manager of Imedi, told Post the same thing: Patarkatsishvili explicitly directed Jaoshvili to transfer Imedi to Kay. ¶7. (SBU) Kay,s lawyers claim that no one has challenged the ownership of Imedi in any court. Three out of four cases contest Kay,s executorship of the estate. The fourth case contests the identity of Patakartsishvili,s legal spouse. All disputes and discussions regarding Imedi,s ownership have been carried out in the media. Each of the four law suits has been filed in a separate country. THE COURT CASES ¶8. (SBU) Case One: Filed in Moscow by Ina Gudavadze, Patarkatsishvili,s first wife, against Olga Saponova the second wife. The Moscow court ruled in Gudavadze,s favor that Saponova was not Patarkatsishvili,s legal wife at the time of his death, but Gudavadze was. Adding further complications, in 1994 Patarkatsishvili and Gudavadze signed a document in which they stated that they had no marriage relationship, but for the sake of the children they were not divorcing, however; Gudavadze agreed to waive any and all property rights beyond what Patarkatsishvili specified in other documents. Gudavadze has admitted to signing this agreement. ¶9. (SBU) Case Two: Filed in New York against Kay by Gudavadze who claims that Kay is not the executor of the estate. This case is currently pending dismissal on jurisdictional grounds. Kay,s U.S. attorneys say this case will be dismissed; Patarkatsishvili was not a U.S. citizen, so a probate case for Patarkatsishvili should not be tried there. ¶10. (SBU) Case Three: Filed in Gibraltar by Boris Berezovsky and Gudavadze questioning Kay,s status as the executor (there may be additional claims). Kay has his own holdings which are administered in Gibraltar and some of Patarkatsishvili,s holdings are also administered there (these include real estate in Gibraltar and elsewhere). Gudavadze claimed that Kay,s holdings were in fact Patarkatsishvili,s and filed suit to get control of them. According to the lawyers she brought a witness who claimed Kay,s holdings were really Patakartsishvili,s but then later admitted he received a bribe to testify falsely against Kay. This case is currently pending with the court having placed the burden of proof on Gudavadze, who has so far produced no evidence that Kay,s holdings were Patarkatsishvili,s. ¶11. (SBU) Case Four: Filed in Tbilisi by Gudavadze to take control of all Patarkatsishvili properties and remove them from Kay,s control (this does not include Imedi). This case was decided in favor of Kay on February 20. The court held that Kay is the proper executor of the estate. Gudavadze has protested the decision in the press and may choose to appeal. POSSIBLE ARBITRATION CLAIM ¶12. (SBU) Gudavadze, per information from her lawyer Mark Hauf, has sent notice of intent to pursue international arbitration against various organs of the Government of Georgia to regain Imedi. However, the Government has not responded to this notice, nor has it confirmed it has Qresponded to this notice, nor has it confirmed it has received such notice. Kay,s lawyers claim they know nothing about this, but they are not respondents on the notice of arbitration. The claim on the notice alleges the GOG conspired to wrongfully expropriate Imedi. The jurisdictional basis for the claim is that foreign investors per Georgian law can file for international arbitration in certain business disputes. However, Gudavadze is Georgian so it is unclear if the arbitration provision applies in this case regardless of the merits. Additionally, notice claims that Gudavadze has some ownership right in Imedi by virtue of being Patarkatsishvili's widow which would appear to make it a probate claim, rather than investment claim, also rendering it improper for arbitration. GUDAVADZE VERSION OF EVENTS TBILISI 00000398 003 OF 003 ¶13. (SBU) Hauf dismisses the GOG's claims that the temporary seizure of Imedi was necessary because of evidence that Patarkatsisvili was leading a coup d'etat. Hauf says the GOG wanted control of Imedi to silence an independent voice. Hauf claims that straw owner, Jaoshvili was forced/coerced into handing over Imedi to Kay by the GOG after Patarkatsishvili's death. Hauf maintains that Imedi was illegally seized and rightly belongs to Gudavadze. RECENT SALE ¶14. (SBU) On February 25, Joseph Kay sold a 90 percent share to UAE-owned AK, a subsidiary of a prominent investor in Georgia Rakeen group. A representative of RAK Georgia Holding, Mark Monem publicly stated RAK intends to run Imedi as an independent channel. Monem said he was certain that Imedi would turn into a financially strong organization with the help of RAK investment. Monem said RAK intends to allow Imedi to pursue an objective and unbiased editorial policy. EMBASSY COMMENT ¶15. (C) Embassy Comment: Because Patarkatsishvili operated mostly in the shadows and hid his assets under various shell companies and legal fictions, it is very difficult to ascertain to any degree of certainty what Patarkatsishvili did or did not control and how he distributed it. Despite this fact, all of the evidence available to Post suggests that Patarkatsishvili knowingly and purposely effectuated the transfer of Imedi TV to Joseph Kay. Gudavadze has pursued court proceedings regarding Patarkatsishvili's estate in four different legal fora. However, all of the evidence available to Post is that Imedi TV has never been subject to any legal proceeding initiated by Gudavadze or any other potential claimant. As such, we believe it would be improper for Post to politically advocate for the transfer of Imedi TV to Gudavadze, especially considering Gudavadze is asking Post to pursue a claim politically that she has not pursued legally. End Comment. TEFFT